If you’re paying electricity, water, LPG bills via auto-debit, RBI’s new norms affect you

• From October 1, RBI’s new auto-debit rules will be effective after which banks will have to process an additional authentication step for all recurring transactions through debit cards, credit cards and UPI.
• Under the new norms, users who have set automated recurring payments for utility bills, phone recharge, OTT platforms etc., through above payment methods will receive notification from the bank every time before auto-transaction to approve or cancel payment.
• The new norm looks to ensure secure and safe payments by inserting checkpoints before every auto transaction made.

Reserve Bank of India’s (RBI) new norms for auto-debit transactions will come into effect from today, October 1, according to which banks are required to notify users or rather take their confirmation before every auto generated transaction. This rule goes for those using debit/credit cards, wallets and unified payments interface (UPI) for transactions.

Those who have e-mandated their recurring payments through net banking mode for paying either utility bills, phone recharge, over-the-top (OTT) will continue to be the same.

Apart from these, systematic investment plan (SIP) transactions will also not be impacted. This is because most SIP transactions happen through the national automated clearing house (NACH) mandate, which is executed directly by the bank.

So, investors who have their ongoing investment through apps like Zerodha, Upstox, Groww, Motilal Oswal, Angel Broking and other broking firms aka investment platforms need not worry about their SIP payments.

“Zerodha uses an e-mandate facility on the NPCI NACH platform to allow its clients to set up auto-debits. Since the auto-debit instruction is authorised by the client using their bank account, the new RBI rules do not affect this channel. All existing and new auto-debit instructions will be carried out in the same mode as before,” said a spokesperson at Zerodha.

An e-mandate is a standing instruction initiated by the RBI and the National Payments Corporation of India (NPCI) that allows businesses to collect recurring payments of up to ₹5,000.

For recurring payments above Rs 5,000, banks will require an additional link for authentication as they are not eligible for e-mandate based recurring transactions.

This is also because SEBI doesn’t allow stock brokerage firms to accept debit or credit cards from users to make transactions through the investment platform.

Basically, the new guidelines require users to opt for an e-mandate facility through a one-time registration process, which can only be successful once the user validates using a one-time password (OTP), besides entering their bank/card/UPI details. Users will also get an option to pause, modify or cancel their recurring transactions.

So if you have been making payments to your Netflix account or any other OTT platform that lets you make recurring payments, you will have to set up an e-mandate.

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From Netflix and Hotstar to Airtel to Jio bills, brace for surprises as RBI’s guidelines on auto-debit transactions kick-in from October 1